The Capital Markets Tribunal has temporarily stopped proceedings brought against nine senior officials of publicly listed firm Kakuzi by the markets regulator after they were served with a notice to show cause early this month.
The officials are accused of forming companies and approving payments totalling millions of shillings from Kakuzi to these entities without disclosing their interests.
The tribunal chaired by Paul Lilan ordered the status quo as of last week be maintained, meaning that the senior officials of the Nairobi Securities Exchange (NSE)- listed agricultural firm will not be required to file their responses, pending the determination of their case.
The officials led by managing director Christopher John Flowers allege that the Capital Markets Authority (CMA) misrepresented the relationships between them and the entities related to Kakuzi, hence arriving at a wrong decision.
“Whereas the Tribunal is cautious at this stage not to delve into the merits of the application before the hearing inter-partes, from our perusal of the documents on record and the oral arguments by counsel, we are persuaded that the application deserves urgent consideration and determination before a peal is heard,” the Tribunal chaired by Paul Lilan ruled.
The Tribunal stated that they were aware of the possible sanctions and penalties that might be imposed against the senior officials under Sections 25 and 26 of the CMA Act, if the contents of the notice to show cause, issued on September 9, is anything to go by.
“Pending the hearing and determination of the application inter-partes, we direct parties to maintain the status quo obtaining as at 14th September, 2023 regarding the Respondent's Notice to Show cause dated inquiry into the affairs of Kakuzi Pic,” the Tribunal said.
The appeal will be heard on October 13 after the CMA was directed to file its response within seven days.
Other officials named in the appeal are Nicholas Ng’ang’a, Graham Harold Mclean, Andrew Ndegwa Njoroge, Ketan R. Shah, Daniel Ndonye, Stephen Waruhiu, John Kimani and Benjamin Okiring.
The CMA report accuses some three officials of Kakuzi of entering into a contract with another company for the provision of technical services for finance and administration without disclosing to the board that they were the only shareholders and directors of the company.
The regulator also found that Kakuzi entered into a management support services agreement that had no end date.